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firm ran entirely on the cheap, scalable Amazon Elastic Cloud Compute (EC2) platform, allowing it to buy as much or as little computing power as it needed to serve its customers.

But the company has left the nest, moving most of its operation to Amazon's competitor, Rackspace. Encoding.com, which takes its users' digital video and converts it to video file formats suitable for Web broadcast, digital delivery or other uses, said Rackspace Cloud Servers provides better value for one simple reason.

"A huge percentage [of our customers] are already using Rackspace, so it was a no brainer," said Jeff Malkin, chief operating officer at Encoding.com, due to Rackspace's longtime primary business as a premium-priced managed hosting provider. Moving Encoding.com's services to the same physical servers as its customers meant dramatic decreases in data transfer times and increases in overall performance.

Even though primary operations are being moved to Rackspace, Malkin isn't abandoning ship at EC2. Nor does he have to, since cloud-ready applications are relatively easy to port to different cloud computing platforms. This allows savvy startups like Encoding.com to move wherever costs are lower. Malkin said that customers with data hosted in Amazon Simple Storage Service (S3), the company's cloud storage service, would have their videos processed on EC2 for the same reasons.

Video encoding, or translating video from the format it was shot in into a digital format, has always been a high-powered exercise in the computing world. It takes a lot of CPU to decode and revamp the massive streams of data that make up high-quality footage, and the use of video on the Web is exploding.

Online video has been around for a long time, and the basics of Encoding.com's business are nothing extraordinary. Where Malkin saw opportunity, however, was to use cloud computing as a platform and offer numerous types of video encoding services without having to invest in massive amounts of server capacity.

Better performance with Rackspace For the money, the basic cloud unit -- a virtualized server instance -- was a better performer at Cloud Servers, Malkin said.

"The baseline servers are about two times as fast as at EC2," he said.

"Our servers aren't capped by CPU," said Chandler Vaughn, director of product development at Rackspace, and "everything is on [line] rate-10."

Amazon, said Vaughn, limits the CPU traffic of virtual instances based on type. It also doesn't run its internal infrastructure entirely at 10 GB speeds, which results in better disk-to-disk transfer speeds inside Rackspace's cloud.

The [Rackspace]servers are about two times as fast as at EC2. Jeff Malkin, chief operating officer at Encoding.com,

Both Vaughn and Malkin said these advantages are very specific to the kind of computing Encoding.com is doing, and they don't necessarily apply to other kinds of Web-centric applications. If your server loads don't jump by multiples of ten with no warning or rely on CPU-intensive calculation, the differences between Cloud Servers and EC2 may not matter.

Rackspace recently commissioned a performance study by independent site The Bitsource that confirmed advantages in performance for CPU access and I/O rates.

The benchmark, however, showed that the differences between Amazon and Rackspace were not stark, and the two companies were close in overall costs. Matthew Sacks, The Bitsource proprietor and hardware analyst, said that while Rackspace did show performance advantages over Amazon in The Bitsource's testing, users would be best served by matching their specific application needs with the most suitable offerings from either provider.

Welcome aboard, says Rackspace Rackspace is proud of its new customer. Vaughn said that Encoding.com was Rackspace's biggest customer from a burst-capacity perspective. Most of the negotiations hinged on Rackspace's ability to provide the massive surges in capacity that Encoding goes through.

"The discussions we had with Jeff were mostly around scale," he said.

That wasn't a worry at EC2, even if performance wasn't quite as good. The market-leading cloud service reportedly provisions tens of thousands of server instances each day and may have as many as 500,000 users.

AWS also has marquee video providers like Netflix, Sling Media and its own Amazon.com video services, as well as partnerships with content distribution networks (CDNs) that hosters use to get video to audiences. That makes Encoding.com a prize for Rackspace, which counts a tenth the number of cloud customers as Amazon.

"The scale at which Encoding.com is operating is a feather in our cap," said Vaughn.

It certainly looks that way. But even though Rackspace may perform better than EC2 now, tomorrow could present another provider offering even more value. Most importantly, Malkin and Encoding.com have ably demonstrated that they are ready and able to move where the cloud weather is fairest with unprecedented ease and speed.

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